CHAPTER 8 Arab cooperation

This chapter concludes the Report with a dis- and national security. cussion of the important issue of Arab cooper- While many Arab regional institutions ation. It summarizes the rationale for exist, they are characterized by fragility and in- cooperation, including the enduring and new effectiveness, and national considerations take challenges countries face as they enter the precedence over wider regional ones, leading twenty-first century, challenges that countries to disregard of wider Arab interests. are poorly equipped to meet on their own. It Moreover, even if national interests were to describes the main institutions for Arab coop- converge rather than conflict, the fact that too eration, examines the past history and current many regimes cater to powerful entrenched in- status of cooperation, suggests that achieve- terest groups means that there is no guarantee ments have been far from commensurate with that they would serve the wider public good. the institutional and organizational structures The international and economic environ- elaborated over the past half century or more, ment of the twenty-first century will pose un- and offers reasons for the lack of dramatic suc- precedented challenges to Arab countries. cesses. However, it also notes some areas International cooperation is intensifying and where progress has been made, including with economic success is increasingly dependent on respect to aspects of human development. The knowledge acquisition and ICT, as discussed in chapter concludes with a recapitulation of the chapter 5. Meanwhile, the successive rounds of Arab countries external and internal challenges countries face, trade liberalization under the umbrella of the continue to face the and argues that increased cooperation is both General Agreement on Tariffs and Trade feasible (given the necessary commitment and (GATT) and WTO, burgeoning international outside world, and the political will) because the institutional base al- investment flows, and rapid technological ad- challenges posed by ready exists and essential to strengthen the vances have together led to dramatic changes in the region itself, processes and meet the goals of human devel- global trade and capital flows. In addition, as opment. the role of multinational corporations has individually and alone. grown, that of the state has declined. The last THE RATIONALE FOR ARAB decades of the twentieth century also saw the COOPERATION rise of massive trading blocs such as the North American Free Trade Agreement (NAFTA), Perhaps no other group of states in the world the expanding European Union and Asia- has been endowed with the same potential for Pacific Economic Cooperation (APEC). cooperation, even integration, as have the Arab These developments are defining the fac- countries. Nevertheless, while much of the rest tors on which the future of Arab countries will of the world is moving towards coming to- largely depend. These factors include their gether in larger groupings—especially in ability to (a) deal with structural problems and today’s world of globalization and increased in- technological change; (b) meet the challenges ternational competition—Arab countries con- of globalization (including its sometimes nega- tinue to face the outside world and the tive effects) and economic openness; and (c) challenges posed by the region itself, individu- generate effective collective action to face new ally and alone. By so doing, they are failing to developments and the challenges they pose to capitalize on the benefits that close cooperation governments, businesses, investors, workers, can yield in the fields of human development political parties and institutions.

ARAB COOPERATION 121 THE CURRENT STATUS OF JOINT of a number of agreements that have included ARAB ACTION all or some of the Arab States. Among the most important agreements are the Joint Since their independence, the subject of coop- Defense and Economic Cooperation eration among the Arab States has been at the Agreement (1950) and the Economic Unity centre of discussion at various official and na- Agreement (1957). One of the League’s ob- tional levels, reflecting their common bonds in jectives has been to ensure free movement of terms of language, civilization, history, geo- capital, goods and people, and to ensure the The argument for Arab graphic contiguity and ease of communica- right of the latter to work and to own prop- cooperation revolves tion. Many formulas have been proposed and erty. Other agreements include the resolution around the need for tried for Arab cooperation in the economic, to form the Arab Common Market (1965), the political, social and cultural spheres. Likewise, Arab Cultural Unity Agreement (1964), the an economic and various levels of cooperation have been pro- Strategy for Joint Arab Economic Action social group with a posed, including the bilateral, the multilateral (1980), the Joint National Economic Action on the basis of geographic proximity, the offi- Covenant (1980), the Convention to Facilitate cooperative, cial, the national and the regional. A typical and Develop Trade Exchanges among the innovative policy example of the latter is the League of Arab Arab States (1981), the Standard Convention States, one of the earliest regional experiments for the Investment of Capital in the Arab designed to fulfil a in the world, which was set up in 1945, thus States (1981), and the Arab Free Trade Area comprehensive predating almost all other regional organiza- (1997). tions, and which has spent more than half a These various efforts have been under- agenda for broad- century in uninterrupted efforts towards the taken within an institutional structure that based social and realization of Arab cooperation. While the served as a framework for joint Arab action Arab League has been able to lay the founda- and comprised the Arab League Council, the economic renewal. tions for joint Arab action through a large Economic and Social Council, and the number of frameworks, institutions, Council for Arab Economic Unity, in addition covenants, agreements and resolutions, these to a very large number of other governmental efforts have remained only partially imple- and non-governmental organs set up to man- mented. This explains the League’s limited age the functional roles and operations in- practical effectiveness in comparison to the volved in Arab cooperation. Too often, European Union. however, these efforts have failed to adopt a The League has facilitated the ratification well-defined conceptual frame of reference for human development, relying instead on devel- BOX 8.1 oping institutional frameworks. Nevertheless, Working together: once a dream, today a necessity the coverage of these frameworks encom- No Arab country alone can adequately end, they need to formulate a common passes an impressive range of areas relevant to achieve dramatic social and economic perspective and to set up realistic com- human development, including health, educa- progress based on diversification of mon goals and effective institutions capa- sources of income and acquisition of com- ble of attaining those goals so as to tion, culture, training, environment, jobs and petitive capabilities in the fields of accu- improve the outcomes of their economic the fight against unemployment and poverty-- mulated knowledge and industry. and societal efforts along with their com- all of which are relevant to comprehensive However, by coming together, Arab coun- petitive edge in the world. economic and social development and to tries can reap the benefits of size and scale, The argument for Arab cooperation diversify their combined economies, and revolves around the need for an economic building the human capabilities and raising open up opportunities for investment that and social group with a cooperative, inno- the standards of living of all Arabs. would be unavailable in the absence of co- vative policy designed to fulfil a compre- ordinated efforts and cooperation. In ad- hensive agenda for broad-based social and dition, acting as a group will empower the economic renewal. This endeavour Arabs and allows them to secure rights should go beyond setting up an efficacious and legal claims in international agree- economic programme, or even adopting a THE INSTITUTIONAL ments, which are inevitably affected by the system of government programmes. It FRAMEWORK FOR JOINT ARAB negotiating powers of the parties con- should also include working towards mu- ACTION cerned. More generally, Arab countries tual understanding, assistance and coop- need to agree among themselves about eration, together with a clear strategy that what they need to do in order to take their allows all strata of society to work together The Arab States are well-supplied with joint place in the new World Order. To this as partners. institutions designed to secure and enhance

122 ARAB HUMAN DEVELOPMENT REPORT 2002 cooperation and coordination in the political, BOX 8.2 Cooperative institutions: a diverse set of actors security, economic, social and cultural fields. In spite of the modest returns on Arab co- the Gulf Cooperation Council has all the Conceptually, these can be divided into gov- operation compared to the efforts spent ingredients for successful cooperation and ernmental and non-governmental bodies. and the hoped-for benefits, progress has coordination among the members (i.e., an The governmental institutional framework been made through the establishment of abundance of financial resources and sim- can in turn be subdivided into the political specialized Arab economic organizations, ilar regimes and economic policies), but it specific vocational entities and national has been unable to adopt unified industri- and the functional dimensions. The political funds and financing institutions, and vo- alization programmes across its Member dimension is represented by the summit con- cational training centres in a variety of States. The other two initiatives have ferences that have been held since 1964 on the fields. In addition, other regional bodies fared worse, with difficulties that caused basis of circumstances and need. It has re- have been set up outside the purview of the Arab Maghreb Union to stumble and the Arab League. These include the Gulf the Arab Cooperation Council to freeze its cently been decided that these meetings would Cooperation Council (1981), the Council activities one year after its inception, be held periodically at fixed dates and not be of Arab Cooperation and the Arab owing to differing political positions subject to political fluctuations. Resolutions Maghreb Union (1989). Again, however, among the Member States. taken at summit meetings are considered as the record has been mixed. For example, authoritative guidance for the work of the ministers of information, interior, justice, Arab League Council and for its main organs. housing, transport, social affairs, youth and The functional dimension consists of the main sports, environmental affairs, communication, organs within the Arab League: the Council electricity and tourism. Each council con- of the League, the Council of Joint Arab venes periodically to coordinate policies; pro- Defence, the Economic and Social Council, pose unified policies, procedures and the General Secretariat, the specialized minis- conventions; and meets prior to any interna- terial councils, and the specialized Arab orga- tional assemblies in order to reach a unified nizations and other control and judiciary Arab position (as in the case of the Group of systems (such as the administrative and the in- 77 and with respect to international conven- vestments courts) that operate within the tions on the environment, including the framework of the League. United Nations Framework Convention on The non-governmental institutional Climate Change, the Convention to Combat framework is embodied in vocational entities, Desertification and other international con- including those that are relevant to a specific ventions); and finally, to coordinate positions domain, entities in the business sector, the na- and discuss the candidacy of Arabs for high The Gulf Cooperation tional societies and associations that exist in positions in international organizations and in- the Arab States, and joint investment projects- stitutions. Council has all the -both public and private--in various produc- Politics and fluctuating relations among ingredients for tive sectors. Both the governmental and Arab governments can limit the activity of non-governmental institutional frameworks these councils in spite of their importance. successful cooperation are described in more detail in the following Another factor that has rendered the achieve- and coordination sections. ments of the councils relatively modest and among the members. has limited their effectiveness at coordination THE GOVERNMENTAL INSTITUTIONAL has been the extent to which they have been FRAMEWORK unable to take considered and unified posi- tions on issues of international concern. The governmental institutional framework is diverse. Its effectiveness can be gauged by ex- The specialized Arab organizations amining three of its major constituent parts: These organizations operate in a range of the specialized ministerial councils, the spe- areas, including education, culture, science, cialized Arab organizations, and the Arab agriculture, industry, employment and tech- funds at both the regional and the individual nology. They have been set up in the same country level. way as corresponding organizations in the United Nations and each has a developmental The specialized ministerial councils and coordinating role in its own field. The These councils, established within the frame- number of these organizations has grown ran- work of the Arab League, are composed of the domly rather than on the basis of a compre-

ARAB COOPERATION 123 hensive perspective or well-defined plans to nating the activities of the General Secretariat guide their work or to implement specific pro- of the Arab League and the organizations con- jects within a framework of political, financial cerned and despite the authority exercised by and time commitments. This state of affairs the Economic and Social Council over the spe- necessitated the formation of a committee in cialized organizations’ performance and work 1974 whose function was to ensure coordina- programmes. Other problems include the fail- tion among these organizations. ure of Arab governments to pay their dues to These organizations continued to meet to the overall budgets of the specialized Arab or- provide for coordination, cooperation and dis- ganizations, the backlog of debt incurred by cussion with respect to organizing conferences governments during past years, and the diffi- and training sessions and conducting field culty in covering current expenses of the spe- studies and surveys. These activities, however, cialized organizations, including salaries and carried little weight and were generally weak administrative expenses, a state of affairs that and ineffective. To remedy this situation, a contributes to their inefficiency and weak per- committee was formed in the mid-1980s formance. whose job was to evaluate the performance of Arab organizations. Proposals for improve- Arab development funds ment included restructuring some organiza- Arab development funds are an important tions, abolishing others, merging some with source of concessional financing. They have The most important others, and changing activities and work pro- supported social and economic development grammes. Other procedural proposals in- in a number of Arab States, strengthened the distinguishing cluded setting up work mechanisms, productive sectors, and helped to develop the characteristic of the conducting specific studies, appropriating a region’s inadequate infrastructure in the fields yearly budget and establishing a common ac- of transportation, electric power, telephone Arab development count in the Arab Monetary Fund along with and wireless communications, and other basic funds is their ability to certain controls and regulations pertaining to necessities such as clean water which millions use their capital the management of this account. of Arabs lack. Conceptually, they can be di- Despite the importance of these modifica- vided into regional, national and international effectively without tions, they have not been implemented effec- funds. The regional funds consist of the Arab having to rely on tively, partly because of pressure from some Fund for Social and Economic Development Arab States to maintain the status quo of the (1967) and the Arab Monetary Fund (1976). yearly (voluntary) organizations singled out for change and The national funds consist of the Kuwait Fund budgets . partly because of complex financial difficulties for Arab Economic Development (1961), the in the early 1990s that affected Arab govern- Abu Dhabi Fund for Development (1971) and ments and organizations, exemplified by bud- the Saudi Development Fund (1974). Their getary deficits that have completely paralyzed participation in development has had a posi- some of them and severely limited the perfor- tive impact on Arab cooperation. The interna- mance of others. The supreme coordinating tional funds consist of the Islamic committee has been unable to devise adequate Development Bank (1975), which is financed solutions that would increase the organiza- mostly by Arab countries, providing it with tions’ financial resources and enhance their ef- over 70 per cent of its financial resources, and ficiency. One proposal to this end, which has the OPEC Development Fund (1976), which been passed as a resolution, is to transform obtains about two thirds of its financial re- these organizations into expert institutions in sources from seven Arab oil countries. their respective fields that would serve Arab Perhaps the most important distinguishing public, private and non-governmental sectors. characteristic of the Arab development funds Both the ministerial councils and the spe- is their ability to use their capital effectively cialized organizations thus present a picture of without having to rely on yearly budgets that weak performance. This has diluted the effec- depend on whether or not contributing coun- tiveness of coordination efforts in general de- tries have paid their share. They also offer low spite the work of a supreme coordinating interest rates and extended repayment peri- committee entrusted with the task of coordi- ods. which brings the grant element up to 45

124 ARAB HUMAN DEVELOPMENT REPORT 2002 percent of financing, far above the percentage tain industry such as the steel industry or the of other international sources. Another posi- iron industry or one of the following indus- tive characteristic of these funds is their ability tries: textiles, chemical fertilizers, engineering, to mobilize additional resources from other food, cement, paper, leather and sugar. private and public sources and use them to All these entities were formed in the 1970s support Arab projects. They are thus active in response to the interest of the Council for participants in the region and a counterweight Arab Economic Unity in achieving coordina- to economic stagnation, quite apart from the tion among the various sectors as an important contribution they make to building human first step towards Arab economic cooperation. and institutional capabilities in Arab coun- This interest led to a search for appropriate or- tries. ganizational arrangements for building sector- specific databases, which could in turn help THE NON-GOVERNMENTAL INSTITUTIONAL members of the relevant association to know FRAMEWORK their markets and relevant industrial condi- tions. Another objective was to facilitate the This framework consists of trade and profes- exchange of information and expertise and sional associations and joint private-invest- provide opportunities to discuss common ment projects. The importance of these problems and find solutions in order to foster various institutions lies in their connection to better coordination of investment, production the private sector and their ability to function and marketing and promote Arab coopera- with greater flexibility than state bureaucra- tion. Finally, associations were seen as being cies. able to provide consultative services to ongo- ing projects at the technical and economic lev- The importance of Trade and professional associations els, to provide the tools and other (trade and There are three types of trade and professional requirements of production at competitive associations. The first consists of bodies that costs, resulting in the emergence of common professional operate in services sectors such as air and sea interests with respect to these projects. associations) lies in transportation, insurance, banks, stock ex- Over the past decades, a few of the manu- change, hotels, tourism, and real estate. facturing associations have been able to realize their connection to the Membership is limited to Arab companies in some important achievements. In the final private sector. the above-mentioned sectors. There are also a analysis, however, they have been unable to number of associations in the services sectors develop relevant industrial activities and chan- whose membership is made up of Arab busi- nel them into an integrated, comprehensive nessmen and investors from all Arab coun- whole that creates common interests among tries, for example the Union of Arab the members and helps them to deal with the Investors, and the General Union of the international market as a single unit that can Chambers of Commerce, Industry, and make use of their combined resources. The Agriculture of the Arab countries. These bod- limited outcome of the approach reflects three ies are designed to strengthen bonds among factors: lack of specialized, expert staff; re- their members and to protect their common stricted membership; and weak financial re- interests. sources. For better results, Arab governments The second type consists of professional would need to enact legislation that would re- groups whose membership is restricted to quire public and private projects to become Arab citizens who work in such professions as affiliated with the relevant association so as to medicine, law, accounting and teaching. Their expand membership and provide the addi- objectives include deepening the roots of their tional financial resources needed for these common interests, skills development and de- bodies to play their role in enhancing Arab co- fence of their professional rights. operation more effectively. The third type consists of groups whose activities are specific to a given manufacturing PRIVATE-INVESTMENT PROJECTS sector. Membership is limited to the compa- nies and the establishments that work in a cer- During the last three decades, the Arab

ARAB COOPERATION 125 States have worked to create an investment cli- ple services and small industries with limited mate conducive to attracting Arab private in- capital and impact on development. Few are vestment. They have done this by enacting in the important agricultural or industrial sec- appropriate legislation, offering tax and mon- tors, both of which need to be developed in etary incentives, and providing Arab investors view of their respective links to food security with insurance against possible political and and other major industries. They can also run trade risks. In addition, they have provided into obstacles that cause some of them to the necessary institutional frameworks and stumble and others to close down, with conse- structural and administrative arrangements to quent large losses. Other limitations on pri- facilitate the transfer of capital among Arab vate investment include the instability of States. investment regimes in some Arab countries, These factors combined have enabled the depreciation of local currencies, the multi- Arab investors in some States to launch a num- plicity of government agencies that oversee in- ber of Arab projects that have in their turn vestments, and the complexity of licensing contributed to the transfer of capital. These regulations, together with the deterrent effect projects have been launched either by individ- of political instability and security concerns in uals or by a group of partners from different some Arab States. Arab countries interested in ensuring flows of goods and services across Arab borders, thus WHAT HAS BEEN ACHIEVED? The most striking strengthening the bonds among Arab coun- tries and enhancing mutual economic and Much has changed with respect to the frame- evidence of the lack of trade relations. work for Arab cooperation over the past 50 economic integration Data on these private-investment projects years, and some successes have been achieved. are limited, so opinions differ about their size, However, the end result has been far from among Arab countries sectoral orientation, geographic distribution, commensurate with the massive institutional is the fact that inter- and the conditions under which they perform. superstructure that has been erected and the Arab trade accounts However, estimates have put their number at expectations and aspirations that have sur- around 3,000 projects, their nominal capital at rounded the cooperation effort over five for no more than 7 per around $35 billion dollars, and their invested decades of field work. The performance in cent to 10 per cent of capital at around $29 billion dollars. practice of cooperation organizations, includ- In terms of sectoral distribution, the bank- ing the Arab League and the Council for Arab total Arab foreign ing and finance sector comes first, followed by Economic Unity, has been limited by attention trade. the industrial sector. Next come transporta- to political considerations and issues of re- tion and communications, hotels and tourism, gional balance so that their role has been con- then building, construction and contracting, fined to mediation and weak coordination. agriculture, livestock and fisheries, services, This state of affairs has led Arab governments business and stock in trade, mining and ex- to fail to honour their commitments to the var- traction, in that order. ious cooperative agreements that have been It is estimated that the joint private-invest- produced. It has also detracted from the value ment projects—i.e., those that are shared by of joint Arab action and has minimized its ef- two or more Arab parties—account for 25 per fect, not only among Arab countries but also cent of the total number of projects. Made up on their relations with the outside world. of holding companies, along with banks, ho- The most striking evidence of the lack of tels and tourist establishments, they are con- economic integration among Arab countries is sidered to have an important role in the fact that inter-Arab trade accounts for no promoting joint Arab action; they represent a more than 7 per cent to 10 per cent of total form of Arab cooperation, using Arab capital Arab foreign trade, a figure that has not for investments in Arab countries other than changed since the 1950s. Another example is those to which the investors belong. the limited flow of capital among Arab coun- Despite the importance of private Arab in- tries. Investment capital has instead flowed to vestments, they remain relatively small and the industrial countries, making inter-Arab limited in number. Most projects involve sim- flows far lower than flows of Arab money to

126 ARAB HUMAN DEVELOPMENT REPORT 2002 foreign markets. themselves in both the Arab and international Other examples of the limited nature of arenas. These positive outcomes have been Arab cooperation include the unfulfilled am- brought about fundamentally by an effort on bitions reflected in joint resolutions at the the part of those funds to base their operations Economic Summit Meeting held in Amman in on the needs of the beneficiary states and to 1980, such as the resolutions of the Charter for develop close cooperation with the govern- Arab Economic Action and of the Strategy for ments of those countries to promote their in- Arab Economic Action and also the Arab terests. Likewise, joint Arab institutions and Development Contract. companies have been able to finance a number The failure to achieve comprehensive, co- of projects in the Arab countries that have herent, integrated Arab development and the yielded concrete results in terms of helping to consequent reliance on limited domestic mar- promote economic and social development. kets or integration with foreign markets have Finally, a number of organizations exist that adversely affected Arab economic and social have done important work in developing in- development. National efforts to promote so- formation databases and undertaking studies cial and economic transformation, including directly relevant to the development of the institution-building and raising literacy rates, Arab economy and cooperation in a variety of have done little to ease the situation. fields; Meanwhile, the productive sectors have been • the growing interest in joint Arab projects unable to deliver rapid growth in national in- and shared economic interests that have the comes or new job opportunities. Other prob- potential to stimulate large investments that lems have included acute water scarcity, can obtain the benefits of mass production, Arab cooperation has problems of food security, widening social and advanced technologies, international competi- economic disparities, and the inability of social tiveness and human-resource development. nevertheless had services to expand to meet demand resulting There have also been projects that have sup- some positive from rapid population growth, leading to ported the natural unity of Arab countries— quality shortfalls in education and health ser- for example, those supported by the Arab outcomes, whose vices discussed in earlier chapters. Fund for Economic and Social Development impact has been with respect to connecting the electricity net- SOME POSITIVE OUTCOMES works in most Arab countries along with road dulled by the slow and communications networks. Connecting pace of achievement. Arab cooperation has nevertheless had some the electricity networks alone has reduced positive outcomes, whose impact has been electricity-sector investment requirements, in- dulled by the slow pace of achievement, the creased usage and cut costs. Extending the ambitious expectations that Arab peoples and network to all Arab States could create an leaders have had for cooperation, and the Arab electricity market similar to those of meagerness of what has been achieved by Europe and North and South America. comparison with other multinational group- Likewise, connecting the roads and highways ings, especially the European Union. will tend to increase the flow of goods among Nevertheless, cooperative Arab achievements Arab countries and promote inter-Arab trade. do exist. They include: Future similar cooperative efforts could be en- • the establishment of important economic visaged with respect to natural gas pipelines; institutions that continue to play a prominent • the successful efforts of a number of Arab role in joint Arab action. Among them are the States (the Member States of the Arab Arab Fund for Economic and Social Maghreb and the Member States of the Gulf Development, the Arab Monetary Fund, the Cooperation Council), which have done much Arab funds discussed earlier, the Arab to achieve freedom of movement of their citi- Foundation for the Insurance of Investments zens among the countries concerned, their and a large number of joint Arab production, right to work in various professions and busi- financial and banking companies. Arab devel- nesses, and coordination and unification of opment funds have been able to attain a de- legislation and capital transfer arrangements; gree of success and to establish a presence for • the continuity of inter-Arab communica-

ARAB COOPERATION 127 BOX 8.3 have often acted earlier and more quickly than Contributions to human development governments in responding to the needs of Joint Arab action has focused mainly on ing coordination and cooperation among marginalized social groups. economic aspects of development, but it concerned NGOs operating in the Arab has also contributed to human develop- countries. Finally, the Council has invited ment. Examples include the following: Arab environment experts to a number of OBSTACLES TO ARAB • The Arab Organization for Education, meetings to prepare coordinated positions COOPERATION Culture, and Science has worked on a for international conferences and conven- range of educational issues, including the tions such as the United Nations In spite of the positive elements noted above, development of curricula and educational Framework Convention on Climate and technologies, programmes to eradicate il- international conventions and protocols major obstacles to Arab cooperation remain. literacy, and adult education. It has also concerned with environment and sustain- They include: worked to promote the use of computers, able development. • trying to imitate other economic groupings especially with respect to Arabization, and The Arab Labour Organization and such as the European Union without taking to encourage scientific research at the the Arab Funds have worked on improv- into account Arab conditions and whether pan-Arab level (although its achievements ing working conditions and raising pro- in this domain remain few in number and ductivity standards, on improving other groupings’ initiatives are suitable to limited in scope). transport networks to enhance labour mo- Arab countries’ resources and conditions. An • The Arab Council of Ministers bility, and on upgrading labour qualifica- example is the gradual introduction of the Responsible for the Environment has tions and skills to allow workers to principle of free trade in the hope of achieving worked towards developing solutions to participate in the process of comprehen- environmental problems and to improve sive social and economic development. Arab economic integration, without taking environmental conditions at the pan-Arab Efforts towards these ends include in- into account the inadequacy of Arab coun- level. The Council has organized training creasing education and training resources, tries’ production capacity or their similar pro- sessions and specialized and technical raising skills standards, promoting a work duction patterns that detract from the benefits seminars and conducted studies and re- ethic, and fighting illiteracy. The purpose search projects on environment problems of all these efforts is to enable Arab labour achievable by complementarity; and the status of biodiversity in Arab forces to use and absorb modern tech- • the differences in the political systems and countries. It has undertaken efforts with nologies. As noted in chapter 6, produc- types of Arab regimes, which can lead to dif- respect to desertification, green belts, and tivity is a major issue for the region, and ferences between countries with respect to so- industrial pollution in the Arab world. In despite efforts by countries in the areas of cial and economic priorities and attitudes addition, the Council has formed national health, education and caloric intake (and committees to gather and use information consequential improvements in social in- towards the means and ends of cooperation. about the Arab environment and has cre- dicators), much still remains to be done if The consequences have been that political ated an Arab network for environmentally Arab countries are to raise productivity goals have lacked clarity and specificity; that sustainable development. It has set up the even to the levels achieved in many devel- the modalities of joint Arab action have re- latter as an Arab organization for promot- oping countries, let alone developed ones. mained subject to fluctuations and change tion through a range of governmental and over the past decade; and that real commit- non-governmental levels already discussed, in- ment to adopt joint Arab action has remained cluding summit conferences, the activities of weak. A case in point is that of the Arab com- the General Secretariat of the Arab League mon market which, despite having been rati- and its organizations, ministerial councils, or fied, was actually joined by no more than Even if outcomes have private-sector entities types of services, profes- seven Arab States with divergent economic sions or manufacturing industries. Even if out- systems and policies; this in turn produced not yet come up to comes have not yet come up to expectations, conflicting interests and negligible achieve- expectations, the the continued existence of so many levels and ments; forms of regional dialogue is a hopeful sign of • the strongly negative effect of inter-coun- continued existence of deeper future cooperation; try differences noted above on the perfor- so many levels and • the growing role of CSOs and the emer- mance of the various institutions and gence of joint Arab CSOs that are normally ac- arrangements set up to promote cooperation. forms of regional companied by such new elements as openness, These did not originate and do not operate in dialogue is a hopeful plurality and expressed public opinion. This a vacuum; they reflect developments within sign. phenomenon should help to promote the ex- and among Arab countries, including their pansion of political participation and the for- disputes and relationships with one another. mation of political parties and organizations, They are therefore equally affected by both all of which are considered to be the basis of positive and negative developments that take civil society and an effective, vital force behind place in countries; economic and human development. CSOs • the sometimes overly ambitious and overly

128 ARAB HUMAN DEVELOPMENT REPORT 2002 idealistic goals set for common action and the posed to achieve, through its constituent bod- tendency to consider cooperation a failure ies and its ministerial council, a reasonable de- when these goals are not met. This reflects gree of industrial coordination at least with poor articulation between goals and the pre- respect to important industrial projects requir- requisites for meeting them. What is required ing substantial investment, advanced techno- is to identify achievable goals, determine the logical skills and a large market. Putting these nature of the effort needed to achieve them factors in place would ensure the success of and commit to transparent implementation. these projects and their benefits in Arab and The Convention of the Council for Arab foreign markets. This end, however, has not Economic Unity, ratified in 1957, is one exam- been achieved. Similarly, the Arab Economic ple of failure to meet what turned out to be Council, the Arab Monetary Fund and the unrealistic goals, which included freedom of Council of Presidents of Arab Banks have employment, trade, mobility and ownership. been unable to ensure freedom with respect to Council membership remains limited to a Arab money transfers among Arab countries, small number of States that have failed, even even among those that enjoy relatively close re- after 40 years, to realize any of the set goals. A lations with each other such as the GCC second example is provided by the resolutions Member States, which could have taken steps of the 1980 Amman Economic Summit, which towards monetary union along the lines of the were never implemented, despite being rati- European Union’s introduction of the Euro fied, because they lacked credibility and failed but have not done so; to attract commitment; Finally, a number of broad contextual fac- What is required is to • the limited effectiveness of ratified agree- tors that have tended to put obstacles in the ments and the bodies charged with their im- way of Arab cooperation. These include the oil identify achievable plementation. In addition to the inter-country effect; the vast social differences, which, in goals, determine the differences already noted and the tendency of certain cases, are accentuated by discrepancies governments to be preoccupied with domestic in income and standard of living; and the far- nature of the effort problems and pressures, this weakness reflects reaching political and social implications of in- needed to achieve poor follow-up by country-level implementing tegration despite its huge potentially positive agencies, sometimes compounded by conflicts impact on economies and people. them and commit to of interest. Guarding against this problem en- transparent tails careful evaluation of country-level factors, ARAB COOPERATION: LOOKING including social composition, political system TO THE FUTURE implementation. and vested interest groups, political parties, and factors relating to households and even in- Today’s Arab world faces substantial in- dividuals. Effectiveness in the economic ternal and external challenges to its habitat sphere, and especially in the field of trade, has and its people’s livelihoods. Awareness of also been undermined, as noted earlier, by the these challenges has driven Arab countries to similarity of countries’ production and export take a greater interest in all forms of coopera- systems and structures along with the legacy of tion. 1960s-style protectionism. Meanwhile, labour Externally, the likely defining feature of mobility and investment have been hampered the new millennium is the rapid trend towards by domestic tensions and economic and social globalization, which is transforming all aspects instability in some countries. Finally, reflecting of economic and financial activity, notably unclear or conflicting national and social and trade, along with associated economic, finan- economic policies, not all States have acceded cial and legal structures and institutions. to all agreements and joint Arab projects have Other effects of globalization include develop- not emerged from coordinated production ments already discussed in this and other policies; chapters of this Report. These include the ex- • the limitations on effective cooperation panding role of powerful new groupings of imposed by State inaction. One example in countries in the world economy; new develop- this regard concerns the Arab Organization ments in transportation and ICT, which have for Economic Development, which is sup- not only permeated all areas of cultural, social

ARAB COOPERATION 129 and economic life but have also increased the a supranationalism exemplified by the forma- intensity of international competition; un- tion of giant coalitions with their own institu- precedented rates of technological change and tions and systems that take precedence over new production systems based on just-in-time national authorities in the member states. The methods and outsourcing, transcending na- ability of small entities such as almost all Arab tional barriers; the increased global integra- countries to deal individually with the emer- tion of financial markets; the redefinition of gence of these coalitions, which include the traditional attributes of production in favour most important economically advanced states, of technical and organizational knowledge is highly doubtful. that requires labour forces with advanced All these developments suggest the need technological expertise and skills; the chang- for Arab countries to deepen cooperation ing role of the state, in which it becomes a ref- among themselves at all levels--economic, po- eree, not a player, in production and markets, litical and social--and to consider their na- concerned particularly with ensuring balanced tional interest in terms of a wider Arab and fair competition and preventing monopo- interest. Much of this chapter has focused on lies that distort pricing mechanisms and de- institutions of Arab cooperation because these tract from the efficiency of markets; and institutions, properly reinvigorated, form a finally, the growing demand for human devel- strong foundation and a comprehensive struc- opment and for the freedom and dignity of in- ture that can help Arab countries to work to- dividuals. gether and move forward into the global arena Arab integration is Arab countries have not been, and cannot as a coherent, unified force with common mu- increasingly becoming be, immune to these and other new develop- tual interests—provided, of course, that the fi- ments at the outset of the 21st century. The nance and the political will are present to a prerequisite for a implication of such developments is that Arab implement existing agreements, strengthen decent life, a better cooperation or Arab integration is increasingly existing structures and mechanisms, and im- becoming a prerequisite for a decent life, a prove working procedures and performance. future, and the better future, and the preservation of an ap- In addition to external challenges, how- preservation of an propriate Arab status in the world community. ever, Arab countries face serious internal chal- Such cooperation or integration is needed as lenges that threaten their future economic and appropriate Arab globalization changes the way the global econ- social development. Among the most impor- status in the world omy works, helps to eliminate obstacles posed tant are poverty, unemployment and mount- by geographic location and distance, remakes ing environmental problems, including community. traditional economic concepts, integrates eco- depletion and degradation of natural re- nomic activities that link all parts of the world, sources such as water and land. The serious- and reinforces the market power of multina- ness of these challenges is heightened by a tional corporations and economic coalitions of weak production base and deteriorating edu- states worldwide. cation systems in the Arab world. As noted in The establishment of WTO is itself sym- previous chapters, these challenges put a spe- bolic of a new world of reduced trade barriers, cial premium on reinvigorating Arab educa- increased international competition, and tion, training, research systems and transformation of the world trading system. institutions region-wide, based on the re-eval- This new world poses risks to Arab countries uation of the content and the objectives of ed- individually and offers another reason for their ucation and scientific research and working to coordinate and cooperate with one development and of the structure of the corre- another--in this case in the context of WTO sponding institutions, together with improv- negotiations so as to develop a strong negotiat- ing region-wide economic performance and ing position in areas such as textiles, agricul- management to improve international com- ture, petrochemicals and cultural property. petitiveness. Moreover, it is not only economics that presents compelling arguments for greater The future of the Arab States is to a large Arab cooperation. International political rela- extent contingent on the responsiveness and tions are also being transformed by the rise of the will of their governments, their business-

130 ARAB HUMAN DEVELOPMENT REPORT 2002 men and their investors to initiate effective collective action to meet global challenges, es- pecially those stemming from increased eco- nomic openness, and to deal with internal structural problems and technological chal- lenges so as together to reap the benefits of globalization. The need is to deepen Arab political, so- cial and economic cooperation in coming years, based on mutual understanding and support and a clear strategy that enables all classes of society to work together as partners. Achieving such cooperation means going be- yond lifting trade restrictions and enlarging trade through the Arab Free Trade Area to embrace other key priorities. These include building human, technological and productive capabilities across the Arab region and estab- lishing what can be called "a zone of Arab cit- izenship" that guarantees the freedom of The future of the Arab movement of factors of production, including States is to a large labour, capital, goods and services. This will require an institutional structure able to work extent contingent on towards these goals in ways that secure wide- the responsiveness spread popular assent and participation in line with the theme running throughout this and the will of their Report, namely, that the human being must be governments, their at the centre of development processes and goals. businessmen and their The dignity and the freedom of the Arab investors to initiate people demand that countries join together to provide human services: health, education effective collective and training, particularly for girls and women action. and people living in rural areas, along with strong efforts to abolish illiteracy, especially in the less developed Arab countries. Cooperation in financing and implementing such programmes (whether at the regional or the individual country level) is in essence the true basis of all other forms of cooperation. It deserves to be given priority in joint Arab ac- tion because such initiatives are at the heart of human development—and human develop- ment is at the heart of securing a freer, more secure and more fulfilled future for every citi- zen of all the Arab States.

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